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Heavy equipment supply chains have long life cycles and strong requirements for customization. The industry is currently in the middle of a major transformation. The Intenet of Things is redefining service and maintenance. The industry is trying to adapt to new business models and embrace the short lifec ycles of software upgrades. At a recent conference we had this discussion with the team from John Deere. They were fascinated by the orbit charts and wanted to see how they stacked up. We agreed to do the financial analysis in exchange for sharing on Beet Fusion. Here we share the results.

Performance and Improvement

As shown in Figure 1, both John Deere and Caterpillar (a close competitor) struggled over the period of 2006-2015. Both companies experienced a decline in operating margin and inventory turns.While both patterns show a decline in supply chain performance, overall John Deere performs better on these two metrics of operating margin and inventory turns.

Figure 1. John Deere and Caterpillar Performance for the Period of 2006-2015

In a deeper analysis, John Deere, when compares to competitors, shows that while the company did better on these two important metrics, they were unable to drive the correlations in growth equal to their peer group.

Table 1. Performance and Improvement for Heavy Equipment for the Period of 2009-2015

So when John Deere looks for supply chain leaders within their peer group, they should look hard at United Tractors and Cummins Engine.

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Author

Lora Cecere

Lora is the Founder of Supply Chain Insights. She founded the firm in 2012 to re-invent the analyst model to make it friendlier and more usable. She writes for the blog Supply Chain Shaman, for Forbes and for Linkedin. Her writing is also featured in a Consumer Goods Technology column Uncorked and in a monthly article series on Metrics that Matter in Supply Chain Quarterly. She has also authored four books: Bricks Matter, Supply Chain Metrics That Matter, and the Shaman's Journal for 2014 and 2105.
Her prior experience includes fifteen years leading manufacturing and distribution teams at Procter & Gamble, Clorox, Dreyer's Grand Ice Cream (now a division of Nestle) and General Foods (now a division of Kraft/Heinz) followed by ten years of building and marketing software at Manugistics and Descartes Systems Group. After her experiences in leading teams and building software, Lora became an industry analyst. This was first at the Gartner Group in 2001-2003, followed by work at AMR Research in 2004-2010. When Gartner bought AMR Research, she became a partner at the Altimeter Group where she invested time in learning the ins and outs of open content research.
In her work as an analyst, Lora works with about 200 clients a year, and speaks at about fifty conferences annually. A frequent traveler, you will often find Lora writing on a cross-continent flight.
When not writing or managing Supply Chain Insights, Lora is busy quilting, knitting, and practicing ballet. An avid lover of art, you will often find Lora lurking in art museums in her travels.